Marin condo market on fire

When Jennifer Kyle set out to buy a condominium in Marin, the insurance adviser, who works with real estate agents, knew what to expect: A long slog, multiple offers and fierce competition.

"I was prepared for it to take a year or more," Kyle said. When she scored a San Rafael condo in less than a month, she went into shock. "It really was a miracle," said Kyle, who started looking in April.

According to the experts, Kyle's description is not that much of an exaggeration.

"Condos have come roaring back," said Suzanne Shelhart, an agent with Alain Pinel. Multiple bids on the same house and offers above the asking price are becoming common for condo sales in Marin, just as they have been for single-family dwellings.

Condo prices are rising even faster than those of single-family homes. The median price of a Marin single-family home edged up a mere 4 percent in April, to $925,500, while condos shot up 23 percent to $492,500, according to DataQuick of San Diego.

As just one example, "I sold a condo at Edgewater (Edgewater Condominiums of Novato) for $265,000 at the end of 2012, and now I'm listing one in the complex just below it for $409,000," said Spiro Stratigos, a broker-sales associate with Coldwell Banker.

As is the case with single-family homes, the single biggest factor behind zooming condo prices in the county and the area is the dearth of homes on the market. Following the law of supply and demand, as would-be buyers compete over the few properties available, inevitably the prices have risen .... and risen and risen.

This meteoric rise of single-family home prices has in turn sent buyers flocking to the condo market. Other factors include rising rents, the threat that interest rates might go up, downsizing and convenience, experts said.

"In a market where prices are still poised to rise, and other types of housing have very little supply, what exists in condos starts to look more appealing to both owners and investors," said Rob Eyler, chief executive of the Marin Economic Forum and a professor at Sonoma State University.

"In the last couple of years, single-family home prices have surged and it has been a steady climb," said Eric McFarland, a real estate agent with Pacific Union. "The condo market was the slower end of the market to see that effect, but as single-family home prices have increased over the last three years, a lot of people are looking at condos as an alternative."

As a result, McFarland said, "that is becoming a competitive market as well."

"Basically the market is pushing the numbers up, which is pushing people out of homes they might have been able to afford a year ago," Stratigos said. "People are going to have to make a compromise, and that compromise is to go to a bigger-sized townhouse or a planned unit development."

The agent doesn't specialize in condos, but "in the last four weeks, I closed three condo sales," McFarland said. Two of the properties, one in Mill Valley and one in San Rafael, sold for more than the asking price, he said.

Along those lines, "I just sold a condo in DeSilva Island in Mill Valley for $1.75 million," Shelhart said. "The last one I sold there a year and a half ago, with the same floor plan, went for $1.535 million"

Along with factors arising from today's market conditions, conventional reasons are motivating some to buy condos, Shelhart said. Often, people buy condos as part of downsizing, she said.

"The kids are gone, they don't want to take care of a great big house any more. They can still entertain, there's a clubhouse, a pool," the agent said.

Others may opt for condos because of convenience. "People are so busy with their work and travel, they don't want the upkeep of a home any more. With a condo, they can lock it and leave," Shelhart said.

Another, more current reason for the dramatic movement in condo prices: Fear that interest rates may go up, Eyler said. "Folks who are renting may see the window starting to close on low costs of credit."

Speaking of renting, "as rental prices remain high, the after-tax cost of purchase is looking better for ostensibly the same amount of space," Eyler said.

Asking rents in Marin averaged $2,177 in the first quarter of this year. This means that depending on a variety of factors, it could be possible to buy and end up with a mortgage payment roughly the same or only slightly higher.

"If you buy a condo for $500,000, you could end up with a mortgage payment in the ballpark of $2,300," said Stacy Lynch, an agent with RE/MAX. "It makes financial sense (to buy) because rents are going up."

Lynch pointed out that with a condo, factors that would need to be taken into account included homeowners association dues, which could easily run $300 to $500 a month. However, "at the end of the year, you reap the rewards," via the mortgage interest deduction, another factor to consider, she said.

Kyle, the new owner of a San Rafael condo, is keenly aware of the rental situation in Marin.

"My rent would go up a hundred dollars a year," the new homeowner said. "I'm paying the same amount (in mortgage) that I would pay on my rental.

"I can't even say how relieved I am. I was pinching myself when the offer was accepted," Kyle said. "I didn't feel like it was real until I picked up the keys."